*This article is written by a tax practitioner who works with tax matters affecting individuals, including objections, on a regular basis.
If you are reading this article, it probably means that there is an aspect of your return that did not go well and which you are not in agreement with. You might not be sure of the next step to take and you haven’t consulted with a tax practitioner yet.
The next question now is, do you know exactly where things have gone wrong on the assessment? Do you know the SARS code to object with and are there other “hidden” things such as a penalty issued by SARS for an omission of income and/or underpayment of provisional taxes or individual tax returns? It is very important that the taxpayer be fully aware of this as leaving this out could mean that some points are being fought in the objection but those not noted do not, and would then prescribe and/or will not be considered by SARS later. It is, therefore, very important that the objection be done properly and within the SARS objection rules. Our business works with individuals, but the below case (which was based on VAT and not income tax) is important as it now affects objections for individuals.
Take for example a recent case where Computek gave various reasons / grounds in their objection. What was not said is what tipped the case. It was not said that VAT was incorrectly calculated. A few complaints have been noted such as the amount is excessive, unfair, etc. but what should have been said was that VAT was incorrectly calculated and this is the ground for the objection.
When eventually the matter was resolved in court, no document showed that the ground was a miscalculation of the VAT amount. By this time, it was too late to start a new objection as too much time has gone by and therefore could not be condoned. The amount therefore became due and payable.
Based on the above court case, it is very important to submit an objection correctly and within the time allowed.
SARS gazetted new rules during July 2014 and some of the important basics are tabled below:
- A taxpayer only has 30 working days to submit an objection from date of final assessment (this period could be longer if there is no further assessment and was under audit but to keep things safe, we recommend that the objection be submitted ASAP so that their system can reject it out as an invalid objection so that it can be shown that the objection was indeed filed within the prescribed period)
- Where a taxpayer has gone over 30 working days, reasonable grounds for taking longer must be supplied (Such as seeking legal advice or assistance by a professional business in the field)
- Where you have gone over 60 working days, an exceptional reason should exist for not bringing the objection to SARS earlier. (This concept is not defined in law but relates to something out of the ordinary and which does not form part of your day to day life)
- Detailed grounds have to be given based on legislation and not something else such as emotion. (We have this quite a bit actually where people say that they have paid a lot of tax and the assessment is not fair, please correct the assessment – this approach with SARS is wrong! And you may be worse off for using it)
- The form has to be completed properly with all fields populated. (You have a field for income tax issues then provisional tax, interest and penalties). Leaving out a field means that there is no objection for such and therefore, those fields may never be allowed as per the rules.
- Understand your rules and your legal position in terms of legislation as it happens that the burden of proof is on the taxpayer and the taxpayer will have the responsibility to sometimes state aspects of the law to the auditor handling the objection. (Sometimes, being human, your objection could be overlooked as technical information, making your objection correct and valid, and it could be overlooked by SARS). It is on this basis that it is recommended that the case be given to someone in the field, such as a tax advisor.
- Supply SARS with any material within the time limits given.
- Where the objection is not allowed, formulate an appeal. The case will now go to a higher level so it is highly recommended that you have a professional involved (even to handle the objection as it can become very technical and complex, even for individuals with objections relating to their individual tax returns)
- The appeal has to be submitted as quickly as possible (Rule 10 gives 30 days but if you can do this quicker it would be better)
- Try to do a dispute resolution in the appeal as this may afford the opportunity to make representations and to go to SARS and mediate with them with a facilitator provided by SARS. (Again, please don’t try this yourself. Unless you know what you are doing, rather consult a tax consultant)
- If the above fails, you will need a lot of money to fight your point. The next step is the tax board, tax court and then high court. Anyone would prefer to sort out the problem before it goes to this level and having a tax practitioner assisting you will prevent things from getting to this level.
When not aware of the rules and the inner workings of SARS, handling the above is similar to those people who use a motorbike to jump through a flaming hoop. There is a good chance that the person will get to the other side but if anything goes wrong, the person is in major trouble and that may be the last trick that person performs. Both objections and jumping through a flaming hoop have some big risks!
I am not sure what the success rate is when clients do their own objections, but we have many clients that come to us when it is too late. Don’t leave objections for too long, let a tax company assist you and get it out of the way as soon as possible. We hope this article will help you with your objections.