Correction of an assessment: Section 93

As portrayed in the Tax Administration Act No 28 of 2011 (TAA), the dispute resolution rules lay out the legal framework to be followed by both the taxpayer and the South African Revenue Service (SARS) to resolve disputes. Section 93 of the TAA lists a number of circumstances under which SARS can reduce a taxpayer’s tax liability by means of issuing a reduced assessment.

An aggrieved taxpayer has the right to dispute a decision or an assessment that SARS has issued. Section 93(1)(d), other than the formal dispute resolution process, introduces a less formal mechanism to request the correction of an assessment and furthermore requires either a return or an assessment to contain a “readily apparent” error.

SARS can issue a reduced assessment in terms of section 93 of the TAA in the following circumstances:

• Where a taxpayer successfully disputed an assessment under Chapter 9 of the TAA;

• Where it is necessary to give effect to a settlement or a judgment pursuant to an appeal where there is no right to further appeal (Part F and E Chapter 9);
• There is a readily apparent undisputed error in the assessment by SARS or the return of the taxpayer;
• A senior official of SARS is satisfied that the assessment was based on: the failure to submit a return, the submission of an incorrect return by a third party or an employer, a processing error by SARS; or an assessment was based on a return that a person unauthorised by the taxpayer fraudulently submitted.

Section 93(1)(d) will only apply when all the requirements are satisfied and should be seen as an alternative to the formal dispute resolution process. Despite its limited application, this informal mechanism is cost-effective in resolving disputes where errors are readily apparent.

In considering the requirements above, it is important to consider what the words “readily apparent” actually mean.

An error that is readily apparent is clear and visible and can be identified without any difficulty and/or hesitation. Any doubt that may arise would, in this regard, bar a taxpayer’s request for a reduced assessment as the error cannot in these instances be said to be clear and unquestionable.

SARS must, in this regard, be able to identify the error on the face of a return or an assessment, otherwise the error cannot be said to be “readily apparent”. The requirements of section 93(1)(d), notwithstanding its benefits, are onerous, and all taxpayers must ensure compliance with the requirements in its entirety before requesting correction under this provision.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)