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Revealed: The three types of ATR you can apply for

by , 04 October 2013
An Advance Tax Ruling (ATR) is a ruling SARS will grant you if there're no tax law in place for a particular transaction or project you want to start. It'll do the same thing if you're uncertain as to how a tax act will apply. Read on to discover the three types of ATR you can apply for...

According to the Practical Tax Loose Leaf Service, there are three types of ATR you can apply for.

These are:

  1. Binding Private Ruling (BPR)
  2. Binding Class Ruling (BCR)
  3. Binding General Rulings (BGR)

SARS only accepts ATR applications if the proposed transaction is dated in the future. There are NO exceptions to this rule. If the transaction has already occurred, you can't apply for an ATR on this!

Let's look at type of ATR in more detail.

Do you know the three types of ATR you can apply for?

#1: Binding Private Ruling

A BPR is a written statement issued by the Commissioner when he responds to your request asking him to explain how a provision of the tax law will be interpreted and applied for a specific proposed transaction, says the Practical Tax Loose Leaf Service.

A BPR may either agree (positive specific ruling) or disagree (negative specific ruling) with the answer or result you've requested.

If the Commissioner issues a negative specific ruling, he'll notify you and give you a reasonable opportunity either:

  • To consult with the Commissioner regarding the proposed decision; or
  • To withdraw your application before the ruling letter is issued. You'd withdraw to avoid further costs of the ATR. If SARS issues a negative BPR (one you don't agree with), you can withdraw from the ATR process and try restructure the transaction to try end up with a more beneficial tax outcome.

Why you would apply for a BPR?

A BPR will get rid of uncertainty on how SARS'll tax a certain future transaction. It'll get rid of any doubts or worry you have, even if the decision isn't in your favour, at least you'll know what to expect and can plan accordingly.

It allows you to avoid some very serious and nasty surprises when SARS taxes you in an unexpected way.

Who can apply for a BPR?

Any natural person, company, trust or estate, can apply for a BPR. If you're a foreign individual, company or Trust, you can also apply for a BPR for a proposed transaction even if you're not subject to tax in SA.

A tax representative (lawyer or accountant) can apply on your behalf, but must have a power of attorney to do so.

#2: Binding Class Ruling

A BCR is the same as a BPR, except that it's a group of people who need an ATR on a transaction.

For example, if a million people all win R10 in the lottery, they could form a class for ATR purposes because they all have the same transaction and the same uncertainty as to how SARS will tax this.

So, instead of just one person being the applicant on the ATR, they'll appoint a representative to make the ATR application on their behalf.

Basically, a BCR is issued to a class of people.

The Practical Tax Loose Leaf Service defines a class of people as a group of people with a similar interest or character. In the case of a BCR, the commonality between them is a transaction.

#3: Binding General Rulings

A BGR is a statement issued by SARS regarding the interpretation of a Tax Act, or how taxpayers should apply a Tax Act practically.

They generally cover topics or sections of a Tax Act that affect a large number of taxpayers or transactions. SARS will usually issue BGRs as an Interpretation Note or Practice Note.

Well there you have it. These are the three types of ATR you can apply for. Be sure to use them if you're uncertain about how SARS will treat a transaction for tax purposes.

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