TAX3704 Assignment 2 Semester 2 (Detailed Answers) Due 17 September 2024
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Course
Tax Administration
Institution
University Of South Africa
Book
Tax Administration 2021 Comparative Information on OECD and other Advanced and Emerging Economies
The Question
Question 1: (35 marks) Background information Your best friend Ntato Hill called you
and asked for assistance regarding an audit SARS is conducting on her husband,
Jack’s business. The following information may or may not be relevant. • Jack Hill is
70 years old and runs a b...
TAX3704 Assignment 2 Semester 2 due 17 September 2024
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TAX3704
Assignment 2
Semester 2
DUE 17 September 2024
, (a) Statutory Powers of a Senior SARS Official Under a Request for Relevant
Material
Under the Tax Administration Act, 2011 (TAA), a senior SARS official possesses
specific statutory powers during an audit. According to Section 46 of the TAA,
SARS has the authority to request "relevant material" for the purpose of conducting
an audit or inspection. Relevant material can include financial records, invoices,
receipts, and other documents that may assist SARS in determining a taxpayer's
correct tax liability.
Furthermore, Section 47 outlines that if a person fails to comply with a request for
relevant material, SARS may enforce compliance through legal channels. This
signifies that the official can:
1. Request Information: The official can demand that taxpayers provide any
information or documents necessary for assessing their tax liabilities.
2. Enter Premises: SARS officials may enter the premises of the taxpayer
during business hours, without a warrant, to inspect records, which gives
them access to primary data.
3. Examine: Officials can examine and make copies of any relevant material
found during the inspection.
4. Access to Electronic Information: There is a provision for accessing
electronic records or software, ensuring that all accounting practices are
transparent and verifiable.
Jack should understand that these powers allow SARS to thoroughly assess his tax
affairs, and non-compliance can result in legal repercussions.
(b) Burden of Proof in Terms of Section 102 of the TAA
Section 102 of the TAA addresses the burden of proof in tax disputes. It establishes
that the burden of proving a fact lies with the party who asserts it. In the context of an
audit, SARS carries the burden of proof regarding the existence of any ground of
assessment that it raises. It must demonstrate the correctness of its assessment if it
disputes the taxpayer's filings.
However, the taxpayer (in this case, Jack) carries the burden of proving any
affirmative defenses or claims for deductions that he may assert. Essentially:
• SARS Burden: Must substantiate any proposed adjustments to Jack’s tax
assessment, particularly if they claim he has underreported income or
overclaimed deductions.
• Taxpayer Burden: Must provide evidence to support any assertions made in
the tax return, especially in relation to asserting losses or expenses that may
offset income.
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