Tax 3704 Exam Pack
May/June 2019
Question 1
Part A
a) Explain to Ms Mayflower what is meant by reduced assessment.
• Reduced assessment means SARS has reduced the amount of tax owing by a taxpayer and
additional tax means more tax has been added.
b) Describe what alternative measures, if any, you would suggest to Ms Mayflower to follow in this
regard.
• A correction must be requested by the taxpayer within six (6) months, or such further period not
exceeding six (6) months that SARS under exceptional circumstances may allow, from the date of
assessment for the preceding year of assessment.
c) Advise Ms Mayflower of any circumstances under which SARS may withdraw an assessment
In terms of section 98 of the Tax Administration Act, SARS may withdraw an assessment if the
Commissioner is satisfied: “it was based on an undisputed factual error by the taxpayer in a return; or a
processing error by SARS; or a return fraudulently submitted by a person not authorised by the taxpayer and
when the Commissioner is satisfied that it was based on the failure to submit a return or submission of an
incorrect return by a third party or employer. It imposes an unintended tax debt in respect of an amount that
the taxpayer should not have been taxed on; the recovery of the tax debt under the assessment would
produce an anomalous or inequitable result; there is no other remedy available to the taxpayer; and it is in
the interest of the good management of the tax system’’; and
• “An assessment withdrawn under this section is regarded not to have been issued, unless a senior
SARS official agrees in writing with the taxpayer as to the amount of tax properly chargeable for the
relevant tax period and accordingly issues a revised original, additional or reduced assess-ment, as
the case may be, which assessment is not subject to objection or appeal”.
, d) Inform Ms Mayflower whether a SARS revised assessment replaces the original assessment (state
yes or no). Provide a reason for your answer
• Yes, it replaces the original assessment. A withdrawn assessment is is regarded not have been
issued unless a senior SARS official agrees in writing with the taxpayer
e) Explain to Ms Mayflower the applicable tax periods for the collection of tax debts by the State.
• If a specific time period is imposed under a tax Act, and falls on a Saturday, Sunday or public
holiday the taxpayer must complete the action on the last business day before the holiday. SARS
may specify a time by which a person must act, and if the person performs the action after that
time it is considered that the act was performed the following day.
• Whenever SARS is requested to extend a deadline, it may do so upon request from the taxpayer. In
order to do so, a request must be filed before the deadline terminates. SARS may accept the late
submission of a request for an extension if exceptional circumstances exist. A Ministerial decision
must be published in the Gazette for the variance of any dates.
PART B
a) Inform Mr Khumalo what the term “representative taxpayer” means and in terms of what legislation
he may be duly appointed.
• A representative tax payer this is a person representative agent (Income tax/employer or
• taxpayer is not absolved from paying taxes for failure by a representative taxpayer for not
performing his or her duty.
• SARS has the right to recover taxes from the responsible representative taxpayer
• It is advisable to ensure that enough professional indemnity insurance cover is provided at all times
as the representative taxpayer has to step into the shoes of the taxpayer on whose behalf he or she
acts.
b) Discuss the liability of a “representative taxpayer”
• representative taxpayer is liable to pay the taxes of another person if acting as an agent for the
other person. A representative taxpayer is personally liable for tax payable by the taxpayer
• taxpayer is not absolved from paying taxes for failure by a representative taxpayer for not
performing his or her duty. Note that a representative taxpayer who becomes or ceases to be a
representative taxpayer must inform SARS accordingly within 21 business days (section 153(2)).
• SARS has the right to recover taxes from the responsible representative taxpayer, withholding
• It is advisable to ensure that enough professional indemnity insurance cover is provided at all times
as the representative taxpayer has to step into the shoes of the taxpayer on whose behalf he or she
acts.
May/June 2019
Question 1
Part A
a) Explain to Ms Mayflower what is meant by reduced assessment.
• Reduced assessment means SARS has reduced the amount of tax owing by a taxpayer and
additional tax means more tax has been added.
b) Describe what alternative measures, if any, you would suggest to Ms Mayflower to follow in this
regard.
• A correction must be requested by the taxpayer within six (6) months, or such further period not
exceeding six (6) months that SARS under exceptional circumstances may allow, from the date of
assessment for the preceding year of assessment.
c) Advise Ms Mayflower of any circumstances under which SARS may withdraw an assessment
In terms of section 98 of the Tax Administration Act, SARS may withdraw an assessment if the
Commissioner is satisfied: “it was based on an undisputed factual error by the taxpayer in a return; or a
processing error by SARS; or a return fraudulently submitted by a person not authorised by the taxpayer and
when the Commissioner is satisfied that it was based on the failure to submit a return or submission of an
incorrect return by a third party or employer. It imposes an unintended tax debt in respect of an amount that
the taxpayer should not have been taxed on; the recovery of the tax debt under the assessment would
produce an anomalous or inequitable result; there is no other remedy available to the taxpayer; and it is in
the interest of the good management of the tax system’’; and
• “An assessment withdrawn under this section is regarded not to have been issued, unless a senior
SARS official agrees in writing with the taxpayer as to the amount of tax properly chargeable for the
relevant tax period and accordingly issues a revised original, additional or reduced assess-ment, as
the case may be, which assessment is not subject to objection or appeal”.
, d) Inform Ms Mayflower whether a SARS revised assessment replaces the original assessment (state
yes or no). Provide a reason for your answer
• Yes, it replaces the original assessment. A withdrawn assessment is is regarded not have been
issued unless a senior SARS official agrees in writing with the taxpayer
e) Explain to Ms Mayflower the applicable tax periods for the collection of tax debts by the State.
• If a specific time period is imposed under a tax Act, and falls on a Saturday, Sunday or public
holiday the taxpayer must complete the action on the last business day before the holiday. SARS
may specify a time by which a person must act, and if the person performs the action after that
time it is considered that the act was performed the following day.
• Whenever SARS is requested to extend a deadline, it may do so upon request from the taxpayer. In
order to do so, a request must be filed before the deadline terminates. SARS may accept the late
submission of a request for an extension if exceptional circumstances exist. A Ministerial decision
must be published in the Gazette for the variance of any dates.
PART B
a) Inform Mr Khumalo what the term “representative taxpayer” means and in terms of what legislation
he may be duly appointed.
• A representative tax payer this is a person representative agent (Income tax/employer or
• taxpayer is not absolved from paying taxes for failure by a representative taxpayer for not
performing his or her duty.
• SARS has the right to recover taxes from the responsible representative taxpayer
• It is advisable to ensure that enough professional indemnity insurance cover is provided at all times
as the representative taxpayer has to step into the shoes of the taxpayer on whose behalf he or she
acts.
b) Discuss the liability of a “representative taxpayer”
• representative taxpayer is liable to pay the taxes of another person if acting as an agent for the
other person. A representative taxpayer is personally liable for tax payable by the taxpayer
• taxpayer is not absolved from paying taxes for failure by a representative taxpayer for not
performing his or her duty. Note that a representative taxpayer who becomes or ceases to be a
representative taxpayer must inform SARS accordingly within 21 business days (section 153(2)).
• SARS has the right to recover taxes from the responsible representative taxpayer, withholding
• It is advisable to ensure that enough professional indemnity insurance cover is provided at all times
as the representative taxpayer has to step into the shoes of the taxpayer on whose behalf he or she
acts.
