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Taxpayers must ensure when objecting to an assessment, they do so in terms of the Rules of the Tax Court.
This includes the requirement that notices to Sars must be delivered to the chosen address by Sars for delivery of documents or processes.
A recent Tax Court judgment penned by Judge Edwin Molahlehi concerned a home office allowance of R100 501 claimed by a taxpayer for home office expenses incurred due to Covid.
Sars disallowed the claim and raised an additional assessment. The taxpayer, aggrieved by this, filed a notice of objection and two months later a notice of appeal.
According to the taxpayer, Sars did not respond to the taxpayer’s notices and hence the taxpayer appealed to the Tax Court for a default judgment under the Tax Administration Act (the Act).
Sars opposed the application on the grounds that the taxpayer’s objection “did not comply with the rules” and the taxpayer was advised to file another objection.
Further, “Sars contends that in the absence of a proper appeal by the applicant, the default judgment application is premature and vexatious”.
In argument, Sars raised the point that if it had disallowed an objection as invalid, the taxpayer should have applied to the Tax Court for an order declaring the objection to be valid.
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In addition, Sars argued that the application for a default judgment is unjustifiable because the taxpayer’s notices were not delivered to it in terms of the rules, as the notices had been delivered to the Registrar of the Tax Court and not to Sars.
Molahlehi noted that the registrar is responsible for administering the dispute resolution processes envisaged in the Act and is therefore impartial and independent of the parties.
On hearing argument, Molahlehi found the notices were no properly served on Sars, hence the taxpayer’s application for a default judgment failed.
He therefore deemed it unnecessary to deal with the merits of the dispute between the parties. The taxpayer has not only lost out on what could have been a legitimate claim for home office expenses, but also costs were awarded against them.
Beatrie Gouws, head of stakeholder management and strategic development at the South African Institute of Taxation (Sait) cautions “that taxpayers and tax practitioners should be vigilant to use the correct e-mail and physical addresses when communicating with Sars.
Using the incorrect address is tantamount to travelling down a dead-end street, expecting to arrive at your desired destination, two blocks away”.
ALSO READ: How Sars has changed tax for annuitants
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