Issue 5 of Interpretation Note 15
On 21 December 2018, SARS issued an updated Interpretation Note 15 (Issue 5). This pertains to the exercise of a senior SARS official’s discretion to condone a late objection or appeal.
The legal principles underlying the relevant procedures are contained in s 102(4) and s 107(2) of the Tax Administration Act, read with rules 6 and 7 of the ‘rules’. The interpretation note provides guidance on SARS’s approach to the matter.
Issue 5 does not specifically indicate reasons for the update but appears to contain some minor amendments to the previous Issue 4. In my view, the amendments do not change any principles governing the relevant factors pertaining to the exercise of a senior SARS official’s discretion but merely expands upon the existing rationale for their approach.
Relevant matters to be considered by SARS
As before, the relevant factors in condoning a late objection or appeal remain, namely:
The reasons for the delay.
The length of the delay.
The prospects of success on the merits.
Any other relevant factor.
Section 104(5) places a limitation on the extension of time that a senior SARS official may grant. In essence, if the usual thirty-day period for lodgement of an objection is exceeded, ‘exceptional circumstances’ must exist. (The period may never exceed three years, by operation of law.)
Issue 5 expands upon the expression ‘exceptional circumstances’ with reference to a shipping case MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas & Another 2002 6 SA 150 (C), which, although not considered in a tax context, examined the expression. The gist of the court’s conception of its meaning:
Something out of the ordinary.
Causally connected.
A matter of fact (not law).
In the interpretation note SARS includes as examples of exceptional circumstances the following:
A natural or human-made disaster.
A civil disturbance or disruption in services.
A serious illness or accident.
Serious emotional or mental distress.
It remains challenging for a taxpayer to motivate a condonation for a late objection or appeal. The common reasons of oversight or negligence (including professional negligence of an adviser) will not suffice to succeed in such a request.
[The meaning of ‘exceptional circumstances’ has been covered in detail in 140 TSH 2014. See also 175 TSH 2017 and 189 TSH 2018. In this context, they are not to be conflated with the ‘exceptional circumstances’ relevant to s 218 of the Tax Administration Act, on the remission of a Chapter 15 penalty, from which the SARS examples cited above are taken.—ED]