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TAX2601 EXAM PACK
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Exam of 30 pages for the course TAX2601 EXAM PACK 2022 at University of South Africa (TAX2601 EXAM PACK)
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TAX2601 EXAMEXAM PACK
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MODULE NOTES
Introduction
As Benjamin Franklin once part it “if you do not want to be taxed, never get born.”
Governments exist to fill the void that would exist if everything was left to private individuals. No
one would concerned with other people’s issues so long as it does not affect them. Think of
goods
like provisions of road and e-toll, if you can pay you will not be able to use the road
governments
exist so that everyone in society is concerned for. To provide those essential services
government
need money to do that and governments get their money through taxation, which is part of the
laws government use.
To be proficient in taxation are needs to understand the law and how the various governmental
agencies apply them and how courts interpret those laws whenever a question of the law arises
between a person and the Governmental agencies charged with Enforcing those laws. Tax laws
are enforced by SARS through the commissioner.
The Laws of the country are subject to the Constitution of the South Africa and the Bill of Rights
of South Africa, that is all Laws and regulations must obey the spirit of the Constitution or they
will
be void. Law are enacted by parliament after they have been debated as bills, after they have
been enacted by parliament they are signed by the President into Law. Parliament enacts Laws
by statute.
Application and Interpretation of the Law
When Laws are being interpreted, they are interpreted literally unless such literal
interpretation would lead to an ambiguous result.
Laws that are clear in legislation that need no courts to interpret them are called statute or
statutory law.
Where a question of the interpretation of the law arises between a personal government
agencies that enforces them, where that happens, that would leave the interpretation of
that Law to the courts who are the authority on the interpretation of the
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Law. Courts in South Africa apply the dovine of stare decisis, which states that are
precedent is established, it should be followed, and if a higher court sets a precedent all
lower courts are bound to follow it (previous rulings of higher Courts to be followed by
lower courts).
Level of Courts in South Africa
Constitutional Court (deal with Constitutional issues only)
(Tax Court – it is a special form only
Supreme Court governed when a case on tax is there).
Therefore it is no court in itself
High Court
Magistrates Courts
Before an aggrieved party can approach the Courts they may try to settle the tax issue using the
Alternative Dispute Resolution Method or the Tan Board.
Alternative dispute Resolution
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Is used to settle any type or level of Tan dispute and for it to be effective and binding on the
Parties both must agree to it.
SARS obliged to keep a register of all disputes settled using this Method.
The Tax Board
, Owing taxpayer who disagrees with any decision of the Commission of SARS may
appeal to the tax Board provided that
The amount in dispute is less than R500 000.00 OR
The taxpayer and the Commissioner both agree to take the matter to the tax board.
The team player or the Commissioner does not object to the Board making a ruling on the
tax issue.
The Tax board will be composed of an advocate or attorney who will chair the
Board. An accountant or representative of the Business / Commercial Community.
The Tax Court
Is a creation of statute and has no standing in its own right, its decision are only binding on
the parties involved. However its rulings or decision have persuasive value on other parties as
well.
The Tax Court will consist of judge of the Supreme Court (who will be Court President),
An Accountant 9who has been in practice for 10years) and a representation of the
Commercial Community/ Business Community.
The tax Court will always hear the case between the taxpayer and SAR from the
beginning.
Tax Court rulings do not set precedent hence the tax Court is not bound by its own
decisions of the past.
In any dispute before the Tax Court the burden of proof lies with the tax payer unless an
amount is to be determined where the one shifts to the Commissioner.
High Court
High Courts only adjudicate issue that are on appeal from the high court or tam issues too
serious for the Tam Board or Tam Court.
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Decisions of the High Court are binding on all lower courts indulge the Tan Court.
Supreme Court
Hears tax case appeal from the High Court or from the Tan Court with Court President
permission.
Decision of the Supreme Court are binding on all Courts.
Constitutional Court
Deal with only Constitutional issues.
Taxpayer can only appeal to this court based on Constitutional challenges to the Law.
One always precedent that has been set by Prior cases brought before the Courts to see how
the Courts might decide on a particular issue of the Law or how it is supposed to be applied by
the
governmental agencies, this is known as case law.
In Interpretation Case Law one always has to pay particular attention to the Rati decidendi
of a case (Reason or ground for decision in that Case) and the Obiter dicta of that
case(statement made in passing to support the reason for the decision in the case).
The level of the Court giving the decision also has to be looked into.
The Ratio decidendi of a higher court is binding on all lower courts while the Obiter dicta
may be used as persusive evidence in the lower courts.
In administrating the tax system SARS is bound by legislation to keep the affairs of
taxpayers secrete and not to disclose them unless they pose a public danger section 4 of the
Act.
Taxation and Statute
Tax is chargeable by virtue of section 5 of the income tax Act 58 of 1962 which states
that “there shall be paid annually for the benefit of the national Revenue had an income
tax…” sotax is paid on income and on other transaction by virtue of different
legislation like VAT, Estate duty etc.
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