An analysis of the provisions governing the prescription of assessments in South African fiscal legislation

Abstract

The purpose of the study was to conduct an investigation into the recent approaches by courts and the legislature towards striking a balance between the public interest that the Commissioner must collect tax that is payable and the public interest that disputes should reach finality. To achieve the main purpose of the study, a review of the case law and literature was conducted to research the background of prescription in fiscal legislation. The review of the literature and case law included an examination of the importance of the finality of assessments. The study then aimed to research specifically the applicable fiscal legislation and case law relating to retrospective legislation in light of the SARS practice to apply the new section 99 of the ITA to years of assessment which became prescribed before the enactment of the TAA. Thereafter, the study aimed to research case law in respect of the interpretation and application of the concept of “fraud, misrepresentation or non-disclosure” in section 79 of the ITA and section 99 of the TAA. The analysis of the case law illustrated clearly the duty of taxpayers to submit an accurate and complete return (which is not vague and misleading) on which the Commissioner can assess them; the minimum level of information required for purposes of assessment; the duty of taxpayers when submitting tax returns and supporting documentation to SARS and the duty of the Commissioner when assessing tax returns. The study demonstrated how the courts determined whether non-assessment was a result of misrepresentation or non-disclosure of material facts. Finally the study analysed the case law and commentary of the leading writers in the tax field in Australia and Canada as a comparative study of how legislation and courts in these countries have dealt with the issue of prescription and the reopening of assessments after they have prescribed. The inclusion of this international perspective emphasised the challenge of the courts and legislature in addressing the issue of finality of assessments. Although the prescription provisions in these countries differ in respect of periods, they are very similar as they both allow the revenue authorities to reopen assessment where there has been fraud or misrepresentation on the part of the taxpayer. It is clear from the discussion above that the courts have done a recommendable job in in striking a balance between safe-guarding the public interest that the Commissioner must collect tax that is payable, and the public interest that disputes should come to an end to ensure certainty for taxpayers.