This Note provides guidance on the considerations that a senior SARS official may consider when exercising discretion to extend the prescribed period for lodging an objection under section 104(4) or an appeal under section 107(2) of the Tax Administration Act 28 of 2011 (” The Act”).
Background
A taxpayer who is aggrieved by:
- An assessment made in respect of the taxpayer or
- Certain decisions made under The Act or other tax Acts may object to and appeal against those assessments or decisions.
A person whose objection has been disallowed may appeal to the tax board or the tax court against this outcome. It is important to note that both the objection and appeal must have been lodged in the manner and terms within the periods prescribed in The Act.
Ordinarily, an objection against an assessment or decision must be lodged within 80 business days of the date of assessment or decision unless the taxpayer requested reasons for the assessment or decision, in which case the period runs from a later date. Similarly, an appeal against the disallowance of an objection must be lodged within 30 business days after delivery of the notice of disallowance of the objection.
Extending objection and appeal deadlines
In principle, a senior SARS official may, within prescribed limits, extend the period prescribed in the rules within which an objection or appeal must be lodged if satisfied that reasonable grounds exist for the delay.
The Act allows for an extension of time in which to lodge an objection or for an appeal to be granted. The period of extension is limited as follows:
Objection
- 30 business days, if satisfied that reasonable grounds exist for the delay in lodging the objection and
- Between 31 business days and 3 years, if satisfied that exceptional circumstances exist which gave rise to the delay in lodging the objection.
No extension can be granted in the following instances:
- Delays of more than 3 years from the date of assessment or decision or
- Grounds of objection that are based wholly or mainly on a change in the practice generally prevailing at the date of assessment or decision.
Appeal
A senior SARS official may extend the date for lodging an appeal by:
- 21 business days, if satisfied that reasonable grounds exist for the delay or
- Up to 45 business days, if exceptional circumstances exist that justify an extension beyond 21 business days.
Other considerations
The Act does not prescribe the way the discretion to extend the period for lodging an objection or appeal should be exercised. Therefore, the senior SARS official will need to consider each case based on the relevant facts and exercise procedural fairness.
The following factors are relevant to the exercise of discretion for objections:
- Reason(s) for the delay
- Detailed reasons for failure to lodge the objection timeously must be provided. The requirement of ‘reasonable grounds’ will normally be met if the delay was caused by circumstances outside of the taxpayer’s control (i.e. illness).
- It must be mentioned that ignorance of the law is not regarded as a “sufficient enough” reason for failing to lodge an objection on time.
- The length of the delay
- Justification and supporting evidence will need to be provided by the taxpayer to account for the delay in lodging the objection.
- Prospects of success on the merits of the case
- The potential merits of the taxpayer’s case are not the deciding factors when considering the extension of the objection period. The senior SARS official will need to weigh the reasonable prospects of success of the case against all the factors to arrive at a decision.
- Any other relevant factor(s).
Furthermore, the date for lodging an objection or appeal can be extended if exceptional circumstances exist. Although ‘exceptional circumstances’ is not defined in The Act, these conditions are perceived to be unusual in nature (i.e. a natural disaster, a serious illness or accident). The mere existence of one of these conditions is insufficient and the onus is still on the taxpayer to demonstrate that this circumstance was the cause of the delay.
Conclusion
The updated Interpretation Note 15 provides taxpayers with guidance on the factors that a senior SARS official will consider when deciding whether to extend the period for lodging an objection or an appeal. Although there is a limitation on the period(s) during which an objection or appeal may be lodged, this should not deter taxpayers from contesting an assessment or decision under the relevant Tax Acts, which they may be discontented with.
The time frames that regulate submissions of objections and appeals are strictly followed by SARS and thus, taxpayers are advised to manage any dispute resolution process with SARS keeping in mind Interpretation Note 15.
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Source: SARS Interpretation Note 15 (issue 6)