Section 99 of the Tax Administration Act regulates the prescription of tax periods. The most important circumstances in which SARS is barred from raising further assessments in relation to a tax period are those relating to the passing of time.
As a general rule, SARS is time-barred from raising an assessment in relation to a tax period as follows:
- three years after the date of assessment of an original assessment by SARS (e.g. for income tax);
- five years after the date of assessment of an original assessment either by way of self-assessment or by way of a return (e.g. Value-Added Tax); and
- five years from the date of payment of tax or the effective date (in the case of no payment being made) for a tax period where no return is required.
Taxpayers would therefore generally be able to assume that they would not be at risk of SARS raising additional assessments after the expiry of these time periods but certain exceptions apply to this general rule.
The most important of these exceptions is where there has been fraud, misrepresentation or non-disclosure of material facts which resulted in the proper amount of tax not being assessed.
Section 99 also makes provision for SARS and the taxpayer to agree to extend prescription prior to the expiry of the prescription period. In practice, taxpayers often agree with SARS to extend prescription in order to promote a cooperative relationship with SARS, it also allows audits to be
Two key amendments were made to section 99 by the Tax Administration Laws Amendment Act, 2015.
- The first amendment comes in the form of the introduction of a new section 99(3). This provision allows SARS to extend prescription by a period approximate to a delay arising from a taxpayer failing to timeously provide information requested by SARS or in resolving a dispute over SARS’ entitlement to information.
- The second amendment allows SARS to unilaterally extend prescription is incorporated in the new section 99(4). This provision lets SARS extend prescription by three years in the case of a SARS assessment or two years in the case of self-assessment in certain specified circumstances by giving a taxpayer prior notice of at least 60 days prior to prescription. The result is that prescription in these circumstances may be extended to six years for assessment by SARS and seven years for self-assessment.
This article is provided for information only and does not constitute the provision of professional advice of any kind.