Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

1.1 THE THESIS CONTRIBUTION TO KNOWLEDGE IN TAXATION

The South African tax system has experienced significant changes within the purview of the advent of the Constitution, PAJA, and with the proposed promulgation of the Tax Administration Act.1 The aim of the Tax Administration Act is to streamline the administrative provisions across the various tax Acts and consolidate these provisions into a single piece of legislation. It will bring to the fore the significance of a balance between the rights of taxpayers and the authority of SARS.

One such area is the power of SARS to audit and inquire into the tax-related affairs of taxpayers, and as such in terms of ss 74A and 74B of the Income Tax Act, require taxpayers to give information, documents or things, and to conduct an audit and inquiry on the taxpayer’s premises.

These powers will be revisited in the new Tax Administration Act. The development in the Income Tax Act through the legislative changes, and supported more recently by various analogous supporting case law, has created an emerging body of jurisprudence that, although in its infancy, is developing into a formidable aspect of constitutional and administrative law, as applicable to these audit and inquiry provisions of SARS.

The Constitution protects the fundamental rights of taxpayers in South Africa. There are 27 fundamental rights outlined in ss 9 to 35 of the Constitution, collectively referred to as the Bill of Rights. Not all of the fundamental rights listed in the Bill of Rights are relevant to the SARS’ audit and inquiry provisions.  However, there are 9 fundamental rights that protect taxpayers. These are:

• Equality (s 9),

• Human dignity (s 10),

• Privacy (s 14),

• Freedom of trade, occupation and profession (s 22),

• Property (s 25),

• Access to information (s 32),

• Just administrative action (s 33),

• Access to courts (s 34) and

• Arrested, detained and accused persons (s 35).

The area of research for this dissertation focuses on the constitutional and administrative rights of taxpayers specifically in relation to the audit and inquiry powers of SARS (s 33 read with ss 1(c), 2, 41, 195 and 237). Emphasis in this study will specifically be directed to the taxpayers’ right to just administrative action in the context of these audit and inquiry powers.

This dissertation aims to critically analyse the sections set out above as the foundation of taxpayers rights, and their entitlement to having SARS adhere to their constitutional obligations. This analysis will extend to the definition of ‘administrative action’ in PAJA, and the provisions of ss 3, 5 and 6 of PAJA. The constitutional obligations of SARS in s 4(2) of the SARS Act are also analysed.

This analysis will draw on leading constitutional and administrative case law in support of the hypothesis that taxpayers facing any SARS audit or inquiry, are being subjected to ‘administrative action’ as defined in PAJA, or in accordance with the constitutional principle of legality, and are entitled to question the public powers of SARS. Either way, if SARS acts outside the scope of their powers, as analysed, taxpayers have the right to take that conduct by SARS on review to the High Court.

Next: Chapter 1 – 1.2 THE CONTRIBUTION THAT THIS DISSERTATION WILL MAKE TO TAX LAW LITERATURE

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Footnotes
1 Tax Administration Act 28 of 2011.

In accordance with Circular 230 Disclosure