We have recently been involved in a number of matters involving fishing industry players and the South African Revenue Service (SARS). In some of these instances we have found ourselves asking the question: Does SARS have the jurisdiction and/or the power to act in the manner in which it is acting? The answer to this question lies primarily in the legislation establishing the functions and powers of SARS. It is therefore important that tax payers, particularly companies that can be faced with huge, and sometimes unanticipated tax liabilities, understand the basic source legislation. With regard to administrative issues, the fairly recent Tax Administration Act 28 of 2011 (“the TAA”) has eased the research burden. The TAA creates a single framework for the common administrative provisions of the various tax Acts. Whilst one can certainly praise this move towards coherence, one should not be too quick to praise the TAA as a whole, for therein lies some potentially worrying provisions for the taxpayer, particularly relating to new information gathering powers for SARS.


The Tax Administration Act 28 of 2011 (“the TAA”) was promulgated on 4 July 2012 and largely came into effect on 1 October 2012. In the past, it was difficult to pin point the administrative rules relating to the taxation process, there being a vast number of laws dealing with taxation matters, each setting out their own administrative issues and each dealing with the general powers of SARS. The TAA is intended to simplify and provide greater coherence in tax administration law by eliminating this duplication, removing redundant requirements and by aligning disparate requirements that had previously existed in a number of different tax acts.

The TAA will essentially apply to most of the existing pieces of tax legislation, such as the Income Tax Act, the Value-Added Tax Act, the Transfer Duty Act, the Estate Duty Act and the Unemployment Insurance Contributions Act. Quite significantly, the TAA does not apply to the Customs and Excise Act unless the TAA expressly provides that a provision applies in respect of customs or excise matters. In all other respects, the administration of customs and excise matters is to be treated separately as per the provisions of the Customs and Excise Act.

The TAA is, as its name suggests, only concerned with the administration side of taxation. In other words, substantive issues of taxation, such as taxation rates and the stipulation of instances in which rebates can be claimed, do not fall within the scope of the TAA.


The TAA supplements and extends the information gathering powers of SARS. According to the “SARS: Short Guide to the Tax Administration Act, 2011” (SARS Guide) published by SARS on 5 June 2013, the reasoning behind the new information gathering powers is to “address the problem that too many requests for information by SARS result in protracted debates as to SARS’s entitlement to certain information.” Under Chapter 5 of the TAA, SARS may: conduct unannounced but limited inspections at business premises to verify that a person has complied with formal obligations such as registering and maintaining records; request information concerning previous, current and future tax periods or taxable events; request information in respect of an objectively identifiable taxpayer (for example where SARS is aware of the existence of a transaction that is a taxable event, but not the name of a party to the agreement); request information concerning an objectively identifiable class of taxpayers; conduct audits on a random or risk assessment basis; obtain information for purposes of revenue estimation and; ask a taxpayer to attend an interview at a SARS office to clarify issues of concern with a view to rendering further auditing unnecessary. Furthermore, SARS’s authority to conduct a search and seizure is retained, but extended to allow SARS officials to search premises that are not identified in a warrant, and to conduct a search and seizure without a warrant in limited circumstances.


In the SARS Guide, SARS correctly identifies the Promotion of Administrative Justice Act 3 of 2000 (PAJA) as a relevant piece of legislation requiring SARS to adhere to principles of administrative fairness when taking actions which materially and adversely affect the rights of taxpayers. PAJA determines a set of procedures which give effect to the right to procedurally fair administrative action. These include: the right to prior notice of an intended decision, a reasonable opportunity to make representations, clear grounds for decisions (to be communicated by the decision maker), and notice of the right to request reasons. In terms of PAJA, these procedures must be adhered to by administrators unless there are reasonable and justifiable circumstances to permit the departure therefrom.

In the SARS Guide, SARS explains that during the commentary period on the Tax Administration Bill, comments were made that specific sections should contain administrative fairness provisions to ensure that SARS officials act reasonably and to protect taxpayers from any abuse of power. In response, SARS states in the SARS Guide that these concerns are “incorrect” as PAJA applies “in any event”. SARS therefore argues that it is not necessary for the TAA itself to spell out the relevant aspects of administrative justice and that the TAA has therefore only done so in respect of certain “impactful provisions”.

Whilst SARS is of course correct that PAJA will apply “in any event”, it is very important that tax payers are aware of their rights under PAJA and that, in certain instances where SARS officials act in ways which materially and adversely affect the rights of taxpayers, taxpayers will be fully entitled to quote the provisions of PAJA and to require SARS officials to act fairly towards them. PAJA has overriding application and the TAA must be read in accordance with the rights set out in PAJA.


It is clear from the above that whilst the TAA can be welcomed for its creation of a single framework for the common administrative provisions of the tax acts, there are certain provisions which should be read carefully and should be approached with caution. Taxpayers should understand that they have rights under PAJA which are not clearly spelt out in the TAA. Taxpayers should seek to enforce these rights against SARS where necessary , so as to ensure that practices in variance with the provisions of PAJA are not developed by SARS.

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