This is the first in a series of articles explaining the process of submitting a request to SARS for an advance tax ruling.
A SARS guide, Issue 3, dated 11 June 2025 provides:
- guidance in respect of the application for an advance ruling; and
- an overview of the Advance Tax Ruling (ATR) process.
The guide is not an “official publication” as defined in section 1 of the Tax Administration Act 28 of 2011 and accordingly does not create a practice generally prevailing under section 5 of that Act. It does not consider the technical and legal detail that is often associated with taxation and should, therefore, not be used as a legal reference. It is also not a binding general ruling under section 89 of that Act.
Glossary
- “Advance ruling” means a BCR, a BGR or a BPR;
- “Applicant” means an applicant as defined;
- “ATR” means advance tax rulings;
- “ATR system” means the system used to apply for a ruling application, which is accessible through the SARS eFiling system;
- “BCR” means a “binding class ruling” as defined;
- “BGR” means a “binding general ruling” as defined;
- “BPR” means a “binding private ruling” as defined;
- “business day” means a “business day” as defined;
- “eFiler” means the person performing the activities under his or her e-Filing profile on the ATR system in relation to the application;
- “section” means a section of the TA Act; and
- “TA Act” means the Tax Administration Act 28 of 2011.
The purpose of the advance ruling system is to promote clarity, consistency and certainty regarding the interpretation and application of a tax Act1 administered by the Commissioner.
An advance ruling refers to a BCR, BGR or BPR, which is binding on SARS.
Binding private rulings
A BPR is a written statement issued by SARS regarding the application of a tax Act to one or more parties to a proposed transaction, in respect of that transaction.
An application for a BPR may be made by a person who is a party to the proposed transaction, or by two or more parties to the proposed transaction, as co-applicants. Co-applicants must designate one of the co-applicants to take the lead and be the ‘applicant’ that represents the others.
Binding class rulings
A BCR is a written statement issued by SARS regarding the application of a tax Act to a specific class of persons in respect of a proposed transaction.
An application for a BCR may be made by a person (the applicant) on behalf of a class. A “class” is defined in section 75 as:
“(a) shareholder, members, beneficiaries or the like in respect of a company, association, pension fund, trust, or the like; or
(b) a group of persons, that may be unrelated and”
(i) are similarly affected by the application of a tax Act to a ‘proposed transaction’; and
(ii) agree to be represented by an ‘applicant’;”For example, employers, directors and trustees may apply (respectively) for a ruling relating to their employees, the company’s shareholders or the trust’s beneficiaries under paragraph (a) of the definition of a ‘class’. Paragraph (a) does not, for example, refer to any shareholder in respect of any company. Investors, who hold various shares, do not constitute
a class, unless the shares are of the same class in the same company.
The individual class members, under paragraph (a), do not have to exist, or be identified, at the time of the application because the application is made on behalf of a class and the shareholders, members, beneficiaries or the like are not required to agree to be represented in order to constitute a class member.
Paragraph (b) of the definition of a “class” contemplates a group of unrelated persons that are similarly affected by the application of a tax Act. These persons must agree to be represented by the applicant.
Binding general rulings
A BGR is a written statement issued by SARS under section 89 of the TA Act regarding the interpretation of a tax Act or the application of a tax Act to stated facts and circumstances. Binding general rulings generally cover topics of general interest. A BGR is issued because of a need identified by SARS and, unlike BCRs and BPRs, is not issued pursuant to a ruling application submitted to the ATR unit. Binding general rulings are not considered in this guide and, accordingly, any further reference in this guide to an ‘advance ruling’ will be to a BCR or BPR.
Requirements of an advance ruling
The following is required for an advance ruling:
• An applicant
• A proposed transaction
• A tax compliant applicant
• A tax matter that is suitable for an advance ruling
• Application documents
An applicant
An “applicant” is defined in section 75 as a person that submits an application for a BPR or BCR. More than one applicant may participate in the application, whereby at least one will be the lead applicant (referred to as the “applicant”) representing the other applicants (referred to as the “co-applicants”).
Any natural person or legal entity that intends to be a party to a proposed transaction may apply for an advance ruling. A representative, such as a lawyer, accountant or tax practitioner may submit an application on behalf of an applicant.
Legal status of the applicant
In general, a person must exist before applying for an advance ruling. However, there may be limited circumstances in which a person effectively has the legal ability to act before they come into existence.
For example, a company is a juristic person and has juristic personality as from the date and time that its incorporation is registered. However, section 21(1) of the Companies Act 71 of 2008 permits a person to purport to act in the name of, or on behalf of, an entity that is contemplated to be incorporated, but does not yet exist at the time of, for example, the
application. Therefore, it may happen that an applicant is a company that still must be formed.
SARS will, in such instances, consider the likelihood of incorporation and the subsequent ratification of the purported action, during the application phase.
Proposed transaction
The proposed transaction requirement enables an applicant to have tax certainty before the transaction becomes binding. Advance rulings are therefore only considered in respect of proposed transactions.
A “proposed transaction” is defined in section 75 as “a ‘transaction’ that an ‘applicant’ proposes to undertake, but has not agreed to undertake, other than by way of an agreement that is subject to a suspensive condition or is otherwise not binding”.
A “transaction” means any transaction, deal, business, arrangement, operation or scheme, and includes a series of transactions.
A transaction is considered proposed if, for example, it is seriously contemplated although not yet entered into; or if the underlying agreement has been entered into but is subject to a suspensive condition. A transaction remains proposed until the condition is complied with.
It is often assumed that the implementation of a proposed transaction, before a ruling is issued, will be problematic. This is not necessarily the case as the ATR unit will accept an application (or continue with an application) even if the transaction will be implemented before the ruling is issued. However, the transaction must be proposed at the time the application is made and there must be sufficient time available for the ATR unit to perform the work before the
implementation. The proposed implementation date should preferably be at least 45 business days after the date the application is expected to enter the case-in-progress phase.
This will provide the ATR unit with sufficient time to engage with the matter and raise any glaring issues.
The applicant will have the benefit of a ruling before being bound by the transaction if the application is submitted timeously.
Any concerns relating to the proposed transaction requirement can be clarified with the ATR unit before making an application. The enquiry can be directed to ATRinfo@sars.gov.za.
Tax compliant applicants
Tax status
The applicant and co-applicants must be tax compliant at the time of applying for a ruling. Both the applicant and co-applicants must be up to date with all their tax returns and tax payments. An arrangement made with SARS for the payment of any outstanding taxes or submission of outstanding returns will be accepted.
Compliant with the advance tax ruling process
The ATR unit may, at any stage during the ruling process, request further information from the applicant. If the applicant fails or refuses to provide the information, SARS may reject the application without a refund or a reduction of fees.
Applicants that attempt in good faith to comply with the requirements for applications, or further requests, need not be overly concerned at the prospect of an inadvertent failure to comply properly, because SARS will, under these circumstances, afford an applicant the opportunity to rectify any defects or shortcomings.
Suitable subject matter
Although the advance ruling system provides clarity and certainty regarding the interpretation and application of a tax Act in respect of a proposed transaction, not all matters are suitable for an advance ruling.
Section 80(1)(a) to (f) provides for several instances in which SARS may reject an application.
The Commissioner may also publish a list of additional considerations in respect of which SARS may reject an application.
The ATR unit will engage with the applicant and provide reasons if it proposes to reject an application.
Documents required for an application
The applicant must provide all the necessary information to enable the ATR unit to consider and issue a ruling. The ATR unit will engage with the applicant if information is missing and afford the applicant an opportunity to remedy any shortcomings.
The applicant must prepare and upload the following documents:
• The application document
• Supporting information
• A Power of Attorney (if required)
The application document
The application document, which the applicant must prepare and upload, has to contain confirmations, statements, and certain consents, as required by section 79(4)(a) to (o). The applicant should take note of the requirements listed in this section and ensure that they are specifically addressed in the application document. The document must, for example, include a tax technical discussion on the applicable sections together with a draft version of the ruling that the applicant requires.
The applicant is required to engage thoroughly with the relevant legislation, which means the applicant must:
• identify the statutory provision;
• analyse and discuss the relevant provision in detail, that is, consider and deal with each requirement noted in the provision;
• consider relevant authority, commentary or material;
• apply the principles of statutory interpretation; and
• apply the law to the facts.
The analysis of the relevant authority must not be limited to those supporting the applicant’s argument.
Supporting documents
It is advisable to submit any supporting documents that will aid the applicant’s arguments, demonstrate the issues and/or confirm the facts, such as schematics, process flows, organograms and diagrams, agreements, and legal opinions.
Power of attorney
SARS will not engage with any person other than the applicant, unless such person is duly authorised to represent the applicant in the application. A representative must obtain a Power of Attorney from the applicant and co-applicant(s), which must be submitted to SARS together with the application documents.
The Power of Attorney must be specific in its scope and empower the representative to attend to the application on the applicant’s behalf. A Power of Attorney that authorises a representative to deal with an applicant’s tax matters in general will not suffice.
The applicant should also consider that the representative may have employees, subordinates or colleagues that will participate in the process. The Power of Attorney should be phrased in such a way as to include such employees, subordinates, and colleagues in the Power of Attorney (if applicable).
A second article will discuss the process involved when submitting a request for an advance tax ruling.