The taxpayer's right to finality – a critical analysis of legislation and practice in South Africa

Choate, Julia

The taxpayer's right to finality – a critical analysis of legislation and practice in South Africa

Doctoral Thesis

2022

Abstract

In this thesis, I evaluate whether the exercise of the audit and information-gathering powers granted to the South African Revenue Service under sections 42 and 46 of the Tax Administration Act 28 of 2011 has the capacity to undermine taxpayers' rights to finality, and if so, what can be done to improve this aspect of South African tax administration. To address the first part of this hypothesis, I analyse the content of the right to finality conferred on taxpayers by the "limitation period" prescribed in section 99 of the TAA, in respect of tax assessments. I evaluate the role which the right to finality plays in South African tax administration, with reference to domestic and foreign case law, and international research into selected aspects of tax administration and behavioural economics (concepts such as tax morale and voluntary tax compliance), concluding that finality is a crucial component of an optimally functioning modern tax administration. I also analyse the content of the audit and information-gathering powers granted to SARS under the TAA, and SARS' current administrative policy and practice regarding the exercise of these powers, with reference to the legislation, various SARS manuals and publications, the findings of various commissions of inquiry, examples drawn from legal practice, relevant judgments, and the data compiled and published by the Office of the Tax Ombud. I conclude that the exercise of SARS' audit and information-gathering powers has the capacity to negatively affect the right to finality, and often does so in practice. I also conclude that currently, no satisfactory remedies exist for taxpayers where their right to finality is compromised by the exercise of SARS' audit and information-gathering powers. Having answered the first part of the hypothesis in the affirmative, I investigate potential policy-based solutions to achieve a sustainable and economically viable balance between 7 7 the exercise of SARS' audit and information-gathering powers, and taxpayers' right to finality. I analyse the policy and practice of various comparative international jurisdictions in order to formulate a series of recommendations to improve this area of South African tax administration, in line with current global standards of good practice. My recommendations include the adoption of a more streamlined and nuanced approach to audit and information-gathering by SARS, the urgent adoption and implementation of a comprehensive taxpayers' bill of rights, an operational and cultural shift within SARS towards more collaborative and co-operative practices where possible, and the creation of an independent oversight body to monitor and evaluate the success of policy implementation within and by SARS

Keywords

Commercial Law

Reference:

Collections

PhD / Doctoral

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