The invalidity of a taxpayer’s objection

September 30th, 2015

By Alan Lewis

This article, will consider the legal basis on which the South African Revenue Service (Sars) may declare an objection to be invalid and identify the remedies, which are available to an aggrieved taxpayer.

In particular, it will consider the invalidity of an objection, where a taxpayer has allegedly failed to produce the necessary supporting documents.  It will also consider the legislative requirements for a valid objection.

In conclusion, the article will illustrate the law by means of a case study.

The law

In terms of r 7(2), of the rules (GN R550 GG37819/11-7-2014 in terms of s 103 of the Tax Administration Act 28 of 2011), which prescribe the procedure to be followed in lodging an objection and noting an appeal against an assessment (the rules), ‘[a] taxpayer who lodges an objection to an assessment must –

(a) complete the prescribed form in full;

(b) specify the grounds of the objection in detail including –

(i) the part or specific amount of the disputed assessment objected to;

(ii) which of the grounds of assessment are disputed; and

(iii) the documents required to substantiate the grounds of objection that the taxpayer has not previously delivered to SARS for purposes of the disputed assessment;

(c) if a SARS electronic filing service is not used, specify an address at which the taxpayer will accept delivery of SARS’s decision in respect of the objection as well as all other documents that may be delivered under these rules;

(d) sign the prescribed form or ensure that the prescribed form is signed by the taxpayer’s duly authorised representative; and

(e) deliver, within the 30 day period, the completed form at the address specified in the assessment or, where no address is specified, the address specified under rule 2.’

It is important to note that an objection must ‘specify the grounds of objection in detail …’ (my italics). In simple terms, a taxpayer must set out the full story, warts and all.

In most cases, that would require preparing the grounds of objection, in a separately typed document, instead of simply inserting a brief description of the grounds, on the notice of objection form, which Sars prescribes. There is no place for a ‘Dear Sir’ letter , addressed to Sars, asking it to allow the objection. ‘Detail’ means just what it says: Detail. An objection should contain the facts, and law, which will be presented to the tax court, and which would prove your case.

This rule, does not require a taxpayer to attach the supporting documents, to the objection: The taxpayer must simply specify them, in the objection.

Within 30 days of receipt of the objection, Sars may require the taxpayer to produce the additional substantiating documents necessary to decide the objection, as prescribed by r 8(1) of the rules. Presumably these documents, are the documents, which the taxpayer is obliged to specify in its objection, as referred to in r 7(2)(b)(iii), quoted above.

In terms of r 7(4), where a taxpayer delivers an objection, that does not comply with the requirements of sub-r 7(2), Sars may regard the objection as invalid, and must notify the taxpayer accordingly, and state the ground for invalidity in the notice. This notice must reach the taxpayer, within 30 days of delivery of the invalid objection.

The taxpayer’s remedies: Notice of invalidity

Firstly, the taxpayer may submit a new objection, within 20 days of receipt of the notice of invalidity, or on application by the taxpayer, such extended period, which Sars may allow (r 7(5) of the rules).

Secondly, tucked away in r 52(2)(b) of the rules, is a provision that allows an aggrieved taxpayer, to apply to the tax court, by way of a notice of motion, for an order declaring the objection to be valid.

The case study

I was recently consulted in a matter where Sars had issued a notice of invalidity to a taxpayer. After the consultation, it was agreed that a new objection would be prepared, and submitted to Sars, which would prove that he was indeed not a resident of South Africa, for the tax periods in question, and that consequently, he was not liable to tax in this country.

The grounds of objection set out in detail, the names and addresses of his foreign employers in China and Thailand; it also set out the fact that the taxpayer had lived abroad for a number of years, and had only briefly visited family in South Africa during this time. The objection contained precise details of the taxpayer movements, as well as the details of the foreign taxes, which he had paid.

In support of his objection, the taxpayer attached copies of his employment contract, his certificate of employment, as well as his tax returns. He also tendered delivery of his rather voluminous passport, which reflected his movements during those tax periods.

In reply to his objection, Sars requested the following ‘supporting information’, so that it could ‘process the objection’ –

  • the days that the taxpayer had spent in South Africa, on a company letterhead;
  • the income he had received in South Africa, also on a company letterhead, and
  • details of the days he had spent working in South Africa. In addition, Sars also wanted to know whether or not, the taxpayer had worked on a rotation basis.

Sars did not identify the legal provision, on which it based this request.

In the first place, this request was most unfortunate, as all of this information was contained in the detailed objection. All Sars needed to do, was read it.

Secondly, in the light of the grounds of objection, and the terms of r 8 of the rules, the request was legally invalid, as it requested documents, to which the taxpayer had not referred to in his objection. The only other document, which Sars could legally request, and which had not yet been supplied to it, was his passport, to which he had referred in the objection.

The taxpayer informed Sars accordingly, and in response, Sars issued a notice of invalidity, because he had failed to supply the documents, which it had requested.  In my opinion, there was no legal basis on which to issue the notice of invalidity, as Sars could not demand the information, which it had requested.

In response to Sars notice of invalidity, the taxpayer could either pay the assessed taxes, or submit another objection, or seek an order from the tax court, confirming that his objection was valid. Before he could launch the application, common sense prevailed, and  Sars allowed the objection.

It is most unfortunate to note that Sars’ notice of invalidity, incorrectly informed the taxpayer, that he only had ten days, instead of 20 days, in which to submit another objection. It also failed to inform him that he could approach the tax court for an order declaring his objection to be valid.


Taxpayer and tax practitioners must consider notices of invalidity carefully, in light of both the grounds of the particular objection, and the provisions of r 7 of the rules.

A notice of invalidity may only be issued in certain prescribed circumstances. They may just find that the notice is without substance, and that the Tax Court would in all probability agree with them, that the particular objection is indeed valid.

Alan Lewis BProc LLB (UOFS) LLM (UP) is a tax practitioner in Johannesburg.

This article was first published in De Rebus in 2015 (Oct) DR 52.