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Turn bad tax assessments upside down this tax season

by , 29 January 2016
Our tax and Vat experts tackle a lot of tax assessment cases. And they're surprised that so few of their clients know the objection procedures to fight against unfair tax assessments.

Do you believe that the quickest way to get SARS off your back is to pay up on the assessment? And then heave a sigh of relief, because 'it's over'?

You don't have to accept the tax assessment SARS gives you. You're allowed to object to it if you find it unfair.

But don't forget that under our tax laws, SARS can re-open your assessment and raise an additional assessment against you for 3 years after the initial assessment.

After the 3 years have passed, SARS can't come after you again, unless it has evidence that you've deliberately committed fraud, or are guilty of misrepresentation or non-disclosure to SARS. If so, then it can come after you at any time - the 3 year rule goes out the window!

Has SARS raised an assessment on your taxes?

Don't just sit back and let SARS have its way.

You have a lifeline.

Here are four steps you can use to lodge your objection


You have 30 days to object to an assessment

To do this, you can write SARS a letter, objecting to its assessment. If that fails, or if you're not confident of your letter-writing capabilities, complete an ADR 1 form (for Alternative Dispute Resolution) for companies, close corporations (CCs) and trusts.

Can't meet the 30-day deadline? Do this…

Write to SARS with a request for an extension. Give SARS adequate reasons why the objection will be late. For example, you've been seriously ill, and need more time to recover and then put together the objection.

Once SARS gets this letter, it'll take a closer look at your track record. If you've been a compliant taxpayer, it'll look on your request more favourably. If not, then you'd better have a good excuse!

SARS will also consider the extension you're asking for. A good rule of thumb is to ask for a 30-day extension.

SARS has 90 days to reply in writing, to let you know if it accepts the reasons you've given in your request for an extension. But if it needs more information from you, it has to let you know within 60 days.

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Completing the ADR 1 form

You must give precise and valid reasons for your objection. Refer to the Act wherever possible.  If you have any evidence to support this objection e.g. a logbook to substantiate your travel allowance claims, then attach it.

Don't forget to sign the form before you submit it to SARS! If you don't, it's not a valid objection.

You have to sign the ADR 1 form yourself, as the taxpayer (owner of the business). If you have a tax practitioner or representative acting on your behalf, you must grant him Special Power of Attorney.

Follow this advice and you don't have to swallow an unfair tax assessment ever again! If you're looking for more advice like this, then here's your answer...

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