Your rights and duties when Sars gets in touch
Does your heart sink when you open an e-mail or SMS from the SA Revenue Service (Sars) and see the words "notice of assessment"? There's no need to panic. An assessment is a communication issued by Sars indicating whether you need to pay tax for a specific tax period. The assessment is the way Sars confirms the information you have submitted: the income earned and expenses incurred that you have declared during the tax period.
It states the amount of tax you owe Sars or the refund due to you from Sars. Essentially, it's a squaring off of accounts between you, the taxpayer, and Sars for the tax year.
It is important to analyse the content of an assessment issued by Sars to assess whether you are in agreement with it and that there aren't processing errors in Sars's assessment or errors that you have made in submitting the return.
In the event that Sars has disallowed an expense or increased your income, this will also be reflected in the assessment. In such a case, Sars is obliged to provide you with reasons why it has disallowed a deduction or increased your income. The reasons are important, since they enable you to understand why Sars has taken the decision and to assess whether you would like to challenge the assessment.
Often Sars does not provide reasons for its decision, or the reasons provided are not sufficient to assist you in understanding why Sars has raised the assessment. The Tax Administration Act allows you to request reasons from Sars where the basis of the assessment is unclear to you, before you lodge an objection.
It is important to note that the act sets specific timelines for lodging a dispute against an assessment.
As an aggrieved taxpayer, you can challenge the assessment by lodging an objection within 30 days of the notice of assessment being delivered to you. Any objection that is submitted late must be supported by an application explaining why it is late.
You should also be aware that your obligation to pay any outstanding amount indicated in an assessment will not be automatically suspended if you lodge an objection or an appeal. You must make a formal application to Sars setting out in detail the reasons why Sars should suspend your obligation to pay the amount indicated in the assessment. Sars has the discretion - based on the content of the application - to grant or refuse such a request.
Furthermore, your tax compliance status may be affected by an outstanding debt that has not been suspended and is reflected on the Sars system. Your noncompliance status will remain until the debt has been suspended or you have paid, even if the amount is subject to a dispute.
It is inevitable that there will be situations where you will be unsuccessful in your dispute or will have to accept the liability reflected in an assessment. Where you are unable to pay the tax debt in a single amount in the prescribed payment period, there is provision for a formal instalment payment arrangement in accordance with the Tax Administration Act.
You must submit a formal application to Sars for consideration. The payment deferral will provide temporary relief when your financial position is such that you cannot make immediate payment. It is always advisable to consider this mechanism to avoid harsh collection steps being taken by Sars.
• Nzimande is a member of the SA Institute of Tax Practitioners and a director at EY