Recent circumstances referring to taxpayer confidentiality, notably the tax affairs of public figures like former president Jacob Zuma, elevate questions across the jurisdiction of the Tax Court and whether or not it may very well be broadened.
This might not solely handle the query of confidentiality but in addition lighten the burden of the excessive courts contemplating the quantity of tax litigation that’s carried out in these courts as a result of restricted jurisdiction of the Tax Court, says Louis Botha, senior affiliate at Cliffe Dekker Hofmyer.
Proceedings are routinely confidential within the Tax Court – and routinely public in a excessive courtroom, until the courtroom is satisfied that there’s a “special case” for the matter to be confidential.
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Scope of the Tax Court
The Tax Administration Act defines the scope of the Tax Court and, in a nutshell, the courtroom can hear tax appeals and interlocutory purposes referring to objections and appeals introduced by taxpayers, explains Botha.
However, purposes to evaluate a choice by the South African Revenue Service (Sars) can’t be heard by the Tax Court and have to be heard by a excessive courtroom. Raising the matter throughout a webinar hosted by the South African Institute of Taxation (Sait), Botha mentioned as soon as a matter is earlier than a excessive courtroom the proceedings should not routinely confidential, solely in “special cases”.
Sars has all the time held that taxpayer info is confidential and that that is important to its operations and the belief taxpayers have within the income service to maintain their affairs confidential.
However, there was a lot public debate about the fitting to privateness in distinction to the fitting to info that’s within the public curiosity, such because the monetary affairs and tax compliance of these in public workplace.
Read: ‘Taxpayer secrecy provisions contributed towards the loss of trust in Sars’
And it’s not simply individuals who need privateness – firms can also have particular causes for not desirous to have some info out within the open.
A ‘special case’ software
Structured Mezzanine Investments, a cash lender, wished to maintain details about a number of mortgage agreements confidential in a excessive courtroom software introduced by Sars. The software adopted an audit of the corporate and the refusal of Mezzanine Investments to provide Sars with related materials pertaining to the mortgage agreements.
Sars wished the courtroom to compel Mezzanine Investments to adjust to the request, however the firm introduced an interlocutory software asking the courtroom to listen to the matter in digicam and to seal the file from the general public.
Since the matter was earlier than the excessive courtroom the taxpayer needed to present that it was a “special case” however failed to take action. The courtroom discovered that even when the taxpayer did elevate the “special case exception” the matter didn’t represent a particular case.
The “special case” might have been the truth that the taxpayer wished to maintain commercially delicate info, or details about the affairs of third events (such because the debtors within the mortgage agreements) out of the general public area.
But it didn’t. The Eastern Cape High Court discovered that the taxpayer by no means talked about and even steered that the matter ought to be handled “specially and differently” as prescribed by the Superior Courts Act.
The act states that “save as is otherwise provided for in this Act or any other law, all proceedings in any Superior Court must, except insofar as any such Court may in special cases otherwise direct, be carried on in open court”.
The firm made no reference to this provision within the act, nor did it current any arguments why it believed it had a particular case.
It is recommended that if the Tax Court’s jurisdiction was wider, a case like this might have been introduced earlier than it and the taxpayer would have loved automated confidentiality.
The failure to point any reasoning across the information is most unlucky, says Sait CEO Keith Engel, arguing that the proceedings ought to be in digicam due to potential reputational danger “won’t fly”.
However, the publication of commercially delicate information or in any other case secret info ought to be grounds for a particular case, he says.
Suspension of cost
Botha additionally explains that the Tax Administration Act permits taxpayers to request a suspension of cost of the tax debt pending the decision of a dispute.
There are varied elements that Sars should think about when assessing a suspension software – together with whether or not the taxpayer will endure irreparable hurt, what their present tax compliance standing is, and their monetary state of affairs.
If Sars rejects the appliance, the taxpayer can not observe the traditional objection and enchantment course of. This requires a evaluate, together with a possible software to a excessive courtroom, which implies their monetary place is open for all to see, together with their rivals.
“Generally, that application will be public even though sensitive information may be reflected in the application papers,” says Botha. “Consideration should be given to whether an in-camera application can be made in these circumstances.”
Again, if the jurisdiction of the Tax Court is broadened the matter might have loved automated confidentiality and the delicate info would stay non-public.
