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

CHAPTER 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.1 THE STATUTORY PROVISIONS: SS 74A, 74B, 74 and 75

This chapter analyses the limitations to SARS invoking its discretion in terms of ss 74A and 74B, in making a decision to inquire about and audit information, documents and things of taxpayers.

The key provisions of ss 74A and 74B that limit of SARS’ powers lies in the words and phrases ‘may’, ‘for the purposes of the administration of this Act’, ‘taxpayer’ and ‘shall on demand produce the authorisation letter issued to him’. Each of these phrases are defined, or have express meanings attached to them in the Income Tax Act.

The provisions of ss 74A and 74B must also be read in conjunction with the relevant portions of ss 74 and 75(1)(b) of the Income Tax Act. Section 74 provides the meaning of ‘for the purposes of the administration of this Act’ and an ‘authorisation letter’. Section 75(1)(b) provides the ‘just cause’1 defence to taxpayers where they refuse to adhere to the requests by SARS in terms of s 74A and 74B. Each of these provisions contain conditions that SARS must meet in order to advance towards lawful conduct when invoking their powers to investigate and audit. The fulfilment of those conditions demonstrate the presence of a lawful authority, the fulfilment of relevant jurisdictional facts, and conduct that is intra vires ss 74A and 74B, reasonable and procedurally fair.

Next:  3.2 THE SARS INTERNAL AUDIT MANUAL

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