Rozelle van Schaik - Discussion regarding case
Transcription
Rozelle van Schaik - Discussion regarding case
Discussion regarding case law SARS v Pretoria East Motors (Pty) Ltd Rozelle van Schaik SARS v Pretoria East Motors Overview of the Pretoria East Motors Case Judgment of The Supreme Court of Appeal of South Africa On appeal from Pretoria Tax Court AppellantThe Commissioner for SARS * Conducted an audit for the periods 2000 to 2004 * Additional assessments for the 2000, 2001, 2002 tax years * Additional VAT assessments 2000, 2001, 2002, 2003 and 2004 SARS v Pretoria East Motors Overview of the Pretoria East Motors Case Respondent Pretoria East Motors (Pty) Ltd * Toyota South Africa authorised dealer * Sells new and used vehicles * Customised accounting system SARS v Pretoria East Motors 3 Principles confirmed DISPOSAL OF THE ONUS OF PROOF BASIS OF RAISING ADDITIONAL ASSESSMENTS BASIS ON WHICH A HIGH COURT WILL REVISE PENALTIES Section 102(1) of the Tax Administration Act (‘TAA’) Chapter 8 of the TAA Chapter 9 of the TAA Part D and Part E Paragraph 8 of the Judgment Paragraph 11 of the Judgment Paragraph 54 of the Judgment SARS v Pretoria East Motors Disposal of the onus of proof Section 102(1) of the TAA: A taxpayer bears the burden of proofing: • An amount, transaction, event or item is exempt or not taxable. • An amount or item is deductible or may be set-off. • Rate of tax applicable to a transaction, event, item or class of taxpayer. • Amount qualifies as a reduction of tax payable. • A valuation is correct. • A ‘decision’ subject to objection and appeal under a tax Act is incorrect. SARS v Pretoria East Motors Disposal of the onus of proof Paragraph 8 … ‘It is so that the taxpayer’s ipse dixit will not lightly be regarded as decisive … the interest of justice require that the taxpayer’s evidence and questions of its credibility be considered with great care.’ Consequence of paragraph 8 of the judgment • Impact of paragraph 8 of the judgment on the taxpayers burden of proof SARS v Pretoria East Motors Basis of raising additional assessment Paragraph 11: ‘… The raising of an additional assessment must be based on proper grounds for believing that, in the case of VAT, there has been an under declaration of supplies and hence of output tax, or an unjustified deduction of input tax. In the case of income tax it must be based on proper grounds for believing that there is undeclared income or a claim for a deduction or allowance that is unjustified. It is only in this way that SARS can engage the taxpayer in an administratively fair manner, as it is obliged to do. It is also the only basis upon which it can, as it must, provide grounds for raising the assessment to which the taxpayer must then respond by demonstrating that the assessment is wrong …’ SARS v Pretoria East Motors Basis of raising additional assessment Consequences of paragraph 11 of the judgment: • SARS’s obligation to provide grounds for raising an assessment • Effect on SARS’s ability to raise assessments and/or additional assessments • The taxpayer’s right to request reasons for an assessment SARS v Pretoria East Motors Basis of raising additional assessment Chapter 8 of the TAA deals with Assessments: Section 95 of the TAA deals with estimate assessments and states, inter alia, that SARS must make the estimate based on information readily available to it. Section 96 of the TAA states, inter alia, that estimated assessment need to include a statement of the grounds of assessment. SARS v Pretoria East Motors Basis on which a high court will revise penalties Paragraph 54: ‘As the Tax Court, on appeal to it, was called upon to exercise its own, original discretion, this court will interfere with that determination only on the limited grounds on which a value judgment of a court of first instance my set aside or varied on appeal (CIR v Da Costa 1985 (3) SAA 768). It bears nothing, however, that in this instance the Tax Court simply rubber-stamped SARS decision. Its failure to even engage with the issue means that we are at large.’ SARS v Pretoria East Motors Basis on which a high court will revise penalties Consequences of paragraph 54 of the judgment: • Authority and responsibility of the Tax Court • Authority and responsibility of the High Court