SARS Implement Advance Tax Ruling System

"It has been announced that the long anticipated Advance Tax Ruling System will be implemented this month," stated Tim Desmond, of the Durban law firm Garlicke & Bousfield.  "This system was announced in the 2003 Budget Speech and enabling legislation was enacted in 2004.  It was specified, however, that it would only come into operation on a date to be proclaimed by the President."
 
"The President has made the necessary proclamation, at least in respect of the bulk of the legislation.  The South African Revenue Service (SARS) will begin accepting applications for rulings from 16 October 2006, via its eFiling site.'

"The legislation encompasses three types of ruling: binding private rulings, binding general rulings and binding class rulings.  The first two of these have been brought intooperation, with binding class rulings to follow at a later date.  It is envisaged that legislation for a fourth type of ruling, binding product rulings, will be enacted in due course."
 
"Taxpayers may apply to SARS for a binding private ruling on the tax implications of a specific proposed transaction.  The application will require a lot of detail, including background information, motivation as to why the proposed ruling should be issued and even a draft of the proposed ruling itself.  An issued ruling will be binding on SARS in relation to that specific taxpayer."

"There will be fees for applying for a private binding ruling.  These will be made up of a fixed fee and a cost recovery fee.  The fixed fee will be R2 500 for SMME applicants and R10 000 for all others.  The cost recovery fee will be dependent upon the complexity of a particular application.  SARS must estimate of the cost recovery fee on request."

"All private binding rulings will be published, although they are not binding in respect of other taxpayers.  They will be edited to prevent identification of the applicant, who will have input regarding this process."

"SARS will issue binding general rulings at its discretion.  These will deal with the interpretation of aspects of the tax legislation regarding issues of general interest and importance.  Binding general rulings will be binding on SARS in respect of any taxpayer falling within their scope."
 
"Although both private and general rulings will binding on SARS (subject to the limitations contained in the legislation), they will not be binding on taxpayers.  Taxpayers may have a different interpretation on a particular issue and, if necessary, the matter will be adjudicated in court."