The Value of Professional Tax Advice

Today complying with tax legislation is becoming more complex and the process of applying the law even more complicated. Professional tax advice during these times can be valuable.

This was evident in a judgement in the Tax Court of South Africa on 4 November 2016. The matter was between ABC Holdings (The Appellant) and the South African Revenue Service (SARS).

The Appellant had incorrectly claimed a section 24C deduction and SARS had disallowed it as well as raising a penalty on assessment.

Essentially the appellant had obtained an opinion from a registered Tax Practitioner and as a result had claimed the deduction in good faith.

The Court then made two findings which will be valuable to taxpayers and practitioners.

Firstly, the Court defined a "bona fide inadvertent error" as "an innocent misstatement by the taxpayer resulting in an understatement while acting in good faith and without the intention to deceive". This definition was not applied in this case but it will be useful to future rulings.

Secondly, the Court found that because the taxpayer had proof of an opinion by an independent registered Tax Practitioner, SARS was required to remit the penalty in terms of section 223 of the Tax Administration Act.

Therefore although the taxpayer had made a mistake which would have to be corrected, SARS were ordered to remit the underestimation penalty due to the taxpayer having proof of a written opinion by a Tax Practitioner.

This goes to show that the value of a tax opinion should be remembered and taxpayers should obtain opinions where possible for complicated matters.

Please contact the Kirkman Lanfear Tax Department for more information on:
Tel: (021) 465 - 6023
Fax: (021) 465 - 6089