How to negotiate the SARS tax dispute resolution process

WITH individual tax season around the corner (starting July 1), taxpayers will start submitting their annual tax returns to the South African Revenue Service (SARS).

The submission of these returns will result in some taxpayers going through the SARS dispute resolution process if they are unhappy with SARS’s treatment of their tax return.

This is not always an easy task as SARS seems to make it as difficult as possible for the taxpayer to lodge a successful objection (even when the taxpayer is correct).

Verification/audit

Upon submission of an individual’s annual tax return (ITR12), SARS will often request supporting documents (this is a verification of your ITR12).

These requests will generally relate to deductions/medical rebates that the taxpayer has claimed.

Medical aid certificates, travel logbooks and retirement annuity certificates are common examples of documents that SARS requests.

It is imperative that these documents are submitted within the requisite time frames to ensure that SARS does not disallow them.

If the documents are not submitted timeously, the taxpayer may find themselves in a position where they must go through the objection process to rectify the situation.

If your documents have been submitted and SARS requests further information pertaining to those documents, you are being audited.

This is not necessarily something to be worried about, so long as you have all the correct information to submit to SARS (SARS has been known to get very sticky with things like travel logbooks and may request further information such as the motor vehicle purchase contract).

Notice of Objection (NOO)

You may find yourself in a situation where you need to file a Notice of Objection (NOO).

This can either be because of the rejection of certain documents submitted to SARS during the verification/audit process (in which case SARS will have issued you with an additional assessment); alternatively, it can be because you are not satisfied with your assessment upon submission of your annual tax return, for example, SARS disallowed your wear-and-tear deduction.

It is very important that the NOO is submitted timeously (taxpayers have 30 business days from date of assessment to file the NOO), failing which SARS will reject the NOO application (unless extraordinary circumstances exist for the late filing) and the taxpayer will not be able to take the matter further.

Taxpayers must include the correct income/deduction codes and reasons as to why they are disputing the SARS assessment (as part of their NOO).

Appeal

If SARS rejects your NOO, you then have the option of submitting an appeal (Notice of Appeal or NOA); this can also be submitted via e-filing.

Do not get discouraged at this stage; SARS may incorrectly disallow a NOO but then allow the appeal (even if the reasons are not altered).

The taxpayer must ensure that they consider the reasons for disallowance of the NOO as it may be necessary to adjust the reasons for dispute or the income/deduction codes.

If you are still not satisfied with the outcome of the NOA, you may refer the matter to the tax board/tax court.