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Readily apparent undisputed errors · Tax Break: South African tax for professionals

• 0:11
  Welcome and thank you for joining me for Tax Break.
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  This is a podcast about South African tax, 4 South African tax
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  professionals and practitioners. My name is Peter Frenchman and
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  in each episode I share my thoughts with you on a topic or
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  a recent development in South African tax.
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  And I try to keep the episode short enough that you can listen
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  to them whenever you've got a few minutes in your calendar.
• 0:32
  Now, before we start off, I would like to ask you that if
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  you like the podcast or this episode, whether you would mind
• 0:42
  sending it to one other person who you think would also be
• 0:45
  interested in listening to the podcast.
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  And in this way, you can help me grow the listener base off the
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  podcast overtime, right? So into our topic for today.
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  So we are talking about readily apparent undisputed errors.
• 1:03
  So let's start off by what is it?
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  What does it matter? Where do we find it in the law?
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  So we find it in Section 93 of the Income of the Tax
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  Administration Act, sorry. And that section deals with
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  reduced assessments. So it basically deals with
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  instances where SASH may or must reduce an assessment and it's
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  got the listing of items or instances in which these
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  assessments must be reduced. So it includes for example,
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  following a dispute settlement etcetera.
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  This specific item that we are looking at is in Section 931-D
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  and it says that if Sasha satisfied that there was a
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  readily apparent undisputed error by Sasha tax payer, it may
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  reduce an assessment. Now while we are talking about
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  Section 931-D, there is something that not completely in
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  the line of what the term readily apparent undisputed era
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  means, but I do think it makes sense to to just quickly mention
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  it and that's the timing of when this rule or this provision can
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  be applied. So it is linked to the
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  prescription periods for the specific assessment that we
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  found in Section 99. And it says that if SASH becomes
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  aware of the area before expiry of these periods, the error may
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  even be reduced, although the assessment may even even be
• 2:32
  reduced for the error after the prescription periods.
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  Now the mechanism to ask for or to request a reduced assessment
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  under Section 93 doesn't replace, especially 931-D
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  doesn't replace an objection. So that root of all that remedy
• 2:50
  if you are unhappy about your assessments still remain Section
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  931-D just gives you a a less formal process that you can
• 3:00
  follow to also get your your assessment reduced.
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  Now I did in earlier episodes, In fact, very early in the in
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  the podcast episode 6, that if you want to listen to the the
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  the decision, should you object, should you follow section 93 and
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  some of the considerations there, you can go back and
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  listen to to to episode 6. So why are we talking about a
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  readily apparent undisputed errors today?
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  Sasha recently issued the draft interpretation out for comment.
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  It's a second round of this interpretation out.
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  And although even the interpretation note, once it
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  becomes finalised, isn't binding and there is case law there that
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  confirms this, it does give us a very good indication of Sasha's
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  interpretation and views of a specific provision.
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  So in other words, what you are likely to encounter if you were
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  to to apply this provision. Now, even though this this
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  interpretation note is still in draft, it does give us an
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  indication as to what Sasha's position would be.
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  So the draft interpretation that explains the process, I'm not
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  going to focus on the operational side today.
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  If you are unsure I'll do to apply this or how to apply for
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  this, go and have a look at the draft interpretation notes
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  process. You may may then find that
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  helpful. What I would like to do to focus
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  on on some of the key points in the draft interpretation note on
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  applying the the the the provision within Section 931-D
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  dealing with readily apparent undisputed errors.
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  The first point that's our touches on the is that the
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  provision says such may reduce the assessment if satisfied that
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  the requirements of Section 931-D are made.
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  So the may suggests A discretion.
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  Batash indicates that in the context which used if the
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  provisions of section 931-D plus the relevant law.
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  So in other words, whatever the error is is about or mate then
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  such must exercise or must exercise this discretion to to
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  reduce their assessment is do what they need to be satisfied.
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  Again, the the the the the draft interpretation.
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  It suggested that this is some sort of a subjective discretion
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  on such, but it's not an unfettered discretion.
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  So what interval the draft interpretation note says is that
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  such must apply an objective approach to to the exercise this
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  discretion and they must look at all all reasonable grounds and
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  that's for the tax payer to to to provide those grants to such
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  right. And second point, there must be
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  an error. So in other words, there must be
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  a mistake. WhatsApp indicates is that that
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  mistake can be in a return, in an assessment or even in an
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  underlying record. Then the critical one, and this
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  the the the mistake or the error must be readily apparent.
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  So this was specifically introduced into the law in 2015.
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  So what we take from this is that it's not all errors that
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  qualify for Section 931-D. It must be a specific type of
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  error, a readily apparent 1 society's views on this is that
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  the error must be clearly or easily visible, must be
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  identifiable without difficulty. But I think those things can be
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  probably, but subjective to say how easily is it visible?
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  How difficult is it to, to, to identify.
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  So they, they, they give, they go into quite a bit of detail
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  there. There the guidance that they,
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  that they offer in the draft interpretation note is that they
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  accept the fact that there may be some verification necessary
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  or required to, to confirm the error.
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  But what they specifically then days they believe it's a simple
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  face value verification. It's not an in detailed
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  verification or or investigation that's necessary.
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  They in in the same line they they also indicate that the area
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  must be obvious. So again, referring back to the
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  simple face value verification, it shouldn't involve them having
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  to verify or examine volumes of supporting documents or
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  interpret complex laws, contracts or even tax treaties.
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  And then the last point that I make is that the mistake must be
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  unquestionable. So, so it must be able to look
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  at the, the, the, the, the documents and the return and
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  immediately see that there's a mistake.
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  And it's not questionable whether there is one or not.
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  So whether this applies in in a specific context or not, my
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  experience is is it really depends on the facts of each
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  case. And you could probably make
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  arguments to both sides. A very narrow view as to where
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  very few things would be readily apparent and perhaps more
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  generous view for tax payer as to what could still be
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  considered readily apparent. So my experience with this is
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  that this this is a point that could be contagious.
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  Probably also why such then goes into quite a bit of detail in
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  the draft interpretation. Note.
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  Lastly, the error must be undisputed.
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  So the error must therefore not be questioned, challenged and it
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  must be accepted by Sasha. As soon as Sash takes a view to
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  say, but they don't agree with this, or it was, for example,
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  something that was subject to dispute and such, they didn't
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  accept your, your position, then that error is no longer
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  undisputed, right. So in summary, and to close off,
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  I think two things to, to take home.
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  The first one is to be aware of the Section 93, one deep
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  process. It's a less formal route to get
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  the reduction of an assessment. But, and that's the second
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  point, to be aware that there are very specific requirements
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  and there could be quite narrow that you need to meet to fall
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  into Section 931-D. And that's again where going
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  back to episode 6, you could have the to to be required to
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  make the decision. Do you object or do you follow
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  Section 931-D? That's it for today's episode.
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  If you've got any questions or comments, they sent me an
• 9:51
  e-mail. My e-mail address is in the show
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  notes. It's always nice to get emails
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  from listeners to say that they like what I'm saying.
• 10:00
  Some instances to say, but maybe there's a different
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  interpretation or even just an ideal to for future episode.
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  Then as always, I would like to remind you that nothing in this
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  episode is intended to be tax advice or replacement for fact
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  specific tax advice. That podcast is for information
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  purposes only. Until next time, goodbye.