,LML4804 OCTOBER NOVEMBER PORTFOLIO
(COMPLETE ANSWERS) Semester 2 2024 - DUE 25
October 2024; 100% TRUSTED Complete, trusted
solutions and explanations.
QUESTION 1 (TAX ADMINISTRATION AND TAX AVOIDANCE) The
Tax Administration Act 28 of 2011 (TAA) empowers the
Commissioner for the South African Revenue Service (the
Commissioner) to conduct audits on taxpayers. The
Commissioner has, over the years, announced that the South
African Revenue Service (SARS) will conduct audits on all
taxpayers that enjoy a certain lifestyle. Most recently, the
Commissioner announced that taxpayers who buy certain
premium-brand goods would be subjected to audits. In doing
so, SARS is upholding its commitment to keep a close eye on the
so-called High-Net-Worth (HNW) taxpayers. A HNW taxpayer is
defined as a person whose estate is worth more than R50
million. Following the above statement, SARS announces in the
press that it will be conducting lifestyle questionnaires on all
wealthy taxpayers who are members of the Vintage Club. The
Vintage Club receives a notice from SARS demanding
information about the names and personal details of its
members. WHAT IS REQUIRED OF YOU: The club approaches
you for advice regarding SARS’ notice. Advise the club in terms
of the existing law. [15] SUB-TOTAL FOR QUESTION 1 [15 marks]
The Vintage Club’s query concerns whether it is required to
disclose its members' personal information to SARS in response
,to the notice and, if so, under what legal framework. Below is
an outline to guide your answer.
Legal Framework
1. The Tax Administration Act (TAA): The TAA empowers the
Commissioner of SARS to gather information for tax
compliance, including from third parties (like the Vintage
Club). Specifically:
o Section 46 of the TAA: Allows the Commissioner to
request any information, document, or thing from a
taxpayer or a third party, even if the requested entity
is not under audit itself.
o SARS's Lifestyle Questionnaires: These have been
part of SARS’s strategy to investigate HNW taxpayers
by verifying their declared income against their
lifestyle, aiming to detect underreporting or evasion.
2. Right to Privacy and Protection of Personal Information
Act (POPIA):
o Section 14 of the Constitution: Protects the right to
privacy, which includes individuals’ personal
information.
o POPIA: Imposes restrictions on collecting and sharing
personal information, and mandates that any
personal information processing is subject to lawful
limitations.
, Advising the Vintage Club
The Club needs to balance compliance with SARS’s request and
the privacy rights of its members.
1. Compliance with SARS’s Request:
o Legal Obligation under Section 46: The Vintage Club
may be required to comply with SARS’s request if it is
lawfully issued under Section 46 of the TAA.
o Limits and Specificity: The Vintage Club should
confirm if the request is specific and not overly broad,
which could be challenged if it appears to be a
"fishing expedition."
2. Privacy Concerns under POPIA:
o Lawful Processing of Information: Under POPIA, the
Club must ensure it has grounds to share personal
information with SARS. Section 11 of POPIA allows
processing personal data without consent where
there is a legal obligation, as in responding to SARS's
request.
o Notification to Members: To respect transparency
requirements under POPIA, the Club should inform its
members of SARS’s request, explaining the reason for
the information disclosure and the legal obligation to
comply.
3. Challenging the Notice:
(COMPLETE ANSWERS) Semester 2 2024 - DUE 25
October 2024; 100% TRUSTED Complete, trusted
solutions and explanations.
QUESTION 1 (TAX ADMINISTRATION AND TAX AVOIDANCE) The
Tax Administration Act 28 of 2011 (TAA) empowers the
Commissioner for the South African Revenue Service (the
Commissioner) to conduct audits on taxpayers. The
Commissioner has, over the years, announced that the South
African Revenue Service (SARS) will conduct audits on all
taxpayers that enjoy a certain lifestyle. Most recently, the
Commissioner announced that taxpayers who buy certain
premium-brand goods would be subjected to audits. In doing
so, SARS is upholding its commitment to keep a close eye on the
so-called High-Net-Worth (HNW) taxpayers. A HNW taxpayer is
defined as a person whose estate is worth more than R50
million. Following the above statement, SARS announces in the
press that it will be conducting lifestyle questionnaires on all
wealthy taxpayers who are members of the Vintage Club. The
Vintage Club receives a notice from SARS demanding
information about the names and personal details of its
members. WHAT IS REQUIRED OF YOU: The club approaches
you for advice regarding SARS’ notice. Advise the club in terms
of the existing law. [15] SUB-TOTAL FOR QUESTION 1 [15 marks]
The Vintage Club’s query concerns whether it is required to
disclose its members' personal information to SARS in response
,to the notice and, if so, under what legal framework. Below is
an outline to guide your answer.
Legal Framework
1. The Tax Administration Act (TAA): The TAA empowers the
Commissioner of SARS to gather information for tax
compliance, including from third parties (like the Vintage
Club). Specifically:
o Section 46 of the TAA: Allows the Commissioner to
request any information, document, or thing from a
taxpayer or a third party, even if the requested entity
is not under audit itself.
o SARS's Lifestyle Questionnaires: These have been
part of SARS’s strategy to investigate HNW taxpayers
by verifying their declared income against their
lifestyle, aiming to detect underreporting or evasion.
2. Right to Privacy and Protection of Personal Information
Act (POPIA):
o Section 14 of the Constitution: Protects the right to
privacy, which includes individuals’ personal
information.
o POPIA: Imposes restrictions on collecting and sharing
personal information, and mandates that any
personal information processing is subject to lawful
limitations.
, Advising the Vintage Club
The Club needs to balance compliance with SARS’s request and
the privacy rights of its members.
1. Compliance with SARS’s Request:
o Legal Obligation under Section 46: The Vintage Club
may be required to comply with SARS’s request if it is
lawfully issued under Section 46 of the TAA.
o Limits and Specificity: The Vintage Club should
confirm if the request is specific and not overly broad,
which could be challenged if it appears to be a
"fishing expedition."
2. Privacy Concerns under POPIA:
o Lawful Processing of Information: Under POPIA, the
Club must ensure it has grounds to share personal
information with SARS. Section 11 of POPIA allows
processing personal data without consent where
there is a legal obligation, as in responding to SARS's
request.
o Notification to Members: To respect transparency
requirements under POPIA, the Club should inform its
members of SARS’s request, explaining the reason for
the information disclosure and the legal obligation to
comply.
3. Challenging the Notice:
