Estimated Assessments in terms of Section 95, Tax Administration Act

The current wording of section 95 of the TAA, grants SARS the right to make an original; additional; reduced or jeopardy assessment which is based on an estimate where a taxpayer either fails to submit a return; submits relevant information or a return which is inadequate or incorrect or fails to respond to a request for relevant information, after the delivery of more than one request.

While this section has been part of the tax administration act since it's proclamation in 2012, SARS have increasingly used it in the last few years of assessment, and it appears that taxpayers and their advisors do not fully understand how to deal with it.

In most cases SARS issues an estimated assessment where the taxpayer has failed to submit a return or the relevant requested information. In both cases the taxpayer is prohibited from objecting to that assessment, until the outstanding return or information has been submitted to SARS, and SARS refuses to issue the necessary reduced assessment. This is very important: there is no automatic right to object.

Before you take any action, make very sure that you know why the assessment was issued to you. If necessary, request SARS to provide written reasons for the assessment. The benefit of doing so, is that SARS will be married to those reasons, which may be invaluable if the dispute escalates to objection and appeal stage.

To obtain guidance on how to proceed with any of these steps contact Alan.