modified by the Commissioner, from the date of the official publication of the withdrawal or modification. And section 5(3) of the TAA provides that: ‘A binding general ruling ceases to be a practice generally prevailing in the circumstances described in section 85 of 86.’ Section 85 of the TAA deals with advance rulings and subsequent changes in the law, and section 86 deals with the withdrawal or modification of advance rulings.
Binding on SARS
Having regard to the provisions of both sections 5 and 99(1)(d) of the TAA, it is apparent that a practice regarding the application or interpretation of tax legislation, set out in a binding general ruling, an interpretation note, a practice note or a public notice issued by a senior SARS official or the Commissioner, is effectively binding on SARS once the taxpayer is assessed in accordance therewith.
Where a taxpayer submits a tax return by e-filing, experience has shown that a computer-generated original assessment is, typically, generated almost immediately. Whereas there could well – in the past, prior to the advent of the TAA – have been a suggestion that a purported assessment to which no human being had applied his or her mind was not an ‘assessment’ – there is case law to this effect – there can be no such suggestion since the advent of the TAA, which became effective on 1 October 2012.
This is because section 91, which deals with ‘original assessments’, provides as follows in subsection (1) thereof:
‘If a tax Act requires a taxpayer to submit a return which does not incorporate a determination of the amount of a tax liability, SARS must make an original assessment based on the return submitted by the taxpayer or other information available or obtained in respect of the taxpayer.’ Confining ourselves to the position where a taxpayer submits an income tax return, which is a return that does not incorporate a determination of the amount of a tax liability, it can be seen from section 91(1) that not only can SARS, but SARS must make an original assessment based on the return submitted by the taxpayer, leaving aside situations in which SARS acts on other information available to or obtained by it.
There can therefore now be no suggestion that a computer-generated original assessment, to which no human being has applied his or her mind, is not a valid assessment. This is implicit in section 91(1) of the TAA.
The effect of the above is that if a taxpayer frames a tax return so as to embody a practice regarding the application or interpretation of tax legislation, as set out in a binding general ruling, an interpretation note, a practice note or a public notice issued by a senior SARS official or the Commissioner, the resulting original assessment will – except in unusual circumstances – embody a ‘practice generally prevailing’, and the effect of this is that SARS will be unable to make an additional assessment in respect of what is covered by such ‘practice generally prevailing’, in terms of section 99(1)(d)(i) of the TAA. Moreover, the courts will be bound to recognise and enforce this position, also in terms of section 99(1)(d)(i) of the TAA.
In this way the content of a favourable ‘practice generally prevailing’ can be used to achieve certainty when it comes to assessment by SARS.
‘Mutatis mutandis is an ablative absolute: the first word is the perfect participle, whilst the second word is the gerundive, expressing obligation, of mutare, to change. Thus literally, “those things having been changed which had to be changed”. Any language that can encapsulate the thought in two words must be something special.’
– Louis Kernick
SEPTEMBER 2016 162